D) What firms produce should be aligned with comumers choices. 7) Suppose a firm
ID: 1140919 • Letter: D
Question
D) What firms produce should be aligned with comumers choices. 7) Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative techniques shown in the table below. Assume further that the firm ean hire labor at $2 per unit, land at 53 per unit, capital at $6 per unit, and entrepreneurship at $12 per unit Techniques 4 10 6 5 Land Capital Entrepreneurship 1 1 1 1 Refer to the above table, which technique is the most economically efficient way of producing Zenia? 7)- 8) The following table illustrates alternative production techniques for producing 18 widgets that can be sold for $1 each for a total revenue of S18. Techniques Price Per Unit (ofUnits of Each Resource Required Resource of ResourceA $2 Land Capital 3 Entrepreneurship Refer to the above table. Using the technique C will result in an: 8) A) Economic profit of SI B)Economic profit of S3 D) Economic profit of $2 C) Economic loss of $2 9) The concept of the "invisible hand" is best described by which of the following?9) A) The market system works best when resources are free to move from one use to another B) Ample regulation of business by the govemment will maximize the public's best interests C) The problem of scarcity can best be overcome in a system of mixed capitalism D) Self-interest in a market system will automatically promote the public interest as well 10) Which is true of an economy, which operates entirely through central planning?10) A) There is relative ease in matching resource allocation to consumer demand B) Central planners receive market information through the price mechanism C) Individual economic incentive is reduced by the absence of the profit motive D) The system adapts easily to technological changeExplanation / Answer
7. Technique B is the most efficient since its total costs of production is $53, which is the least. $53 = (10*2+3*3+2*6+1*12)
8. The technique B will result in economic profit of $2 ( since Total revenue is $18 and Total Cost is $16)
9. Option D : Self interest in a market system will automatically promote public interest as well.
10. Option C: Individual economic incentive is reduced by the absence of profit motive
11. Option D: Who makes decisions on what to produce and how to produce
12. Option B: Cordinates and creates consistency in operation of various parts of the economy
13. Option C : It weakens the incentive to maintain the property one already owns.
14: Option D: all of the above
15: Option A: What is produced is determined by what the consumers actually buy
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